Chapter 3 · Part 3 — Capital Gains Tax
Capital Gains Tax
Shares, land and buildings — every rate rose, and gains on shares became a final tax.
3 of 14 · 14 min
If you invest on NEPSE, this is the Part that costs you money. Capital gains tax rose on every category this year, and gains on share transactions became a final tax. This Part covers the rates, the arithmetic, the holding-period rule, and the choice the final-tax provision forces on you.
The new rates — Section 95Ka
┌────────────────────────────────────────┬─────────────┬─────────────┐ │ DISPOSAL │ FY 2083/84 │ FY 2082/83 │ ├────────────────────────────────────────┼─────────────┼─────────────┤ │ LISTED SHARES │ │ held ≤ 365 days (short) │ 10% ▲ │ 7.5% │ │ held > 365 days (long) │ 7.5% ▲ │ 5% │ ├────────────────────────────────────────┼─────────────┼─────────────┤ │ LAND AND BUILDING — natural person │ │ held < 5 years (short) │ 10% ▲ │ 7.5% │ │ held ≥ 5 years (long) │ 7.5% ▲ │ 5% │ ├────────────────────────────────────────┼─────────────┼─────────────┤ │ INVOLUNTARY DISPOSAL of land and │ │ │ │ building of a natural person due to │ 2.5% ▼ │ 5% / 7.5% │ │ compulsory acquisition by decision of │ │ │ │ the Government of Nepal │ │ │ └────────────────────────────────────────┴─────────────┴─────────────┘
Read the direction of travel
╔═══════════════════════════════════════════════════════════════════╗ ║ EVERY VOLUNTARY DISPOSAL RATE WENT UP BY 2.5 PERCENTAGE POINTS. ║ ║ ║ ║ Listed shares, short: 7.5% → 10% (+33% more tax) ║ ║ Listed shares, long: 5% → 7.5% (+50% more tax) ║ ║ Land/building, short: 7.5% → 10% (+33% more tax) ║ ║ Land/building, long: 5% → 7.5% (+50% more tax) ║ ║ ║ ║ The only rate that FELL is involuntary disposal on government ║ ║ compulsory acquisition — down to 2.5%. You do not choose that ║ ║ transaction, so the relief is equitable rather than a planning ║ ║ opportunity. ║ ╚═══════════════════════════════════════════════════════════════════╝
The long-hold incentive survives — and widened
Short rate − Long rate = the reward for holding FY 2082/83: 7.5% − 5.0% = 2.5 percentage points FY 2083/84: 10.0% − 7.5% = 2.5 percentage points The GAP is unchanged, but because both rates rose, the RUPEE value of crossing the 365-day line rose with them.
The holding-period rule — and the day that matters
┌──────────────────────────────────────────────────────────────────────┐ │ LISTED SHARES │ │ │ │ ≤ 365 days ──────────────────────────► 10% │ │ > 365 days ──────────────────────────► 7.5% │ │ │ │ ! The boundary is 365 DAYS, not "one calendar year", not │ │ "one fiscal year". Day 365 is still the short rate. │ │ Day 366 is the long rate. │ ├──────────────────────────────────────────────────────────────────────┤ │ LAND AND BUILDING (natural person) │ │ │ │ < 5 years ──────────────────────────► 10% │ │ ≥ 5 years ──────────────────────────► 7.5% │ │ │ │ ! Note the boundary is stated the other way round: land uses │ │ "less than 5 years" for the high rate, so exactly 5 years │ │ qualifies for the LOW rate. Shares use "≤ 365 days" for the │ │ high rate, so exactly 365 days gets the HIGH rate. │ │ │ │ The two tests are not symmetrical. Read each one literally. │ └──────────────────────────────────────────────────────────────────────┘
Which shares are being sold? Where you have bought the same scrip on several dates, the holding period depends on which lot is treated as disposed of. [R] The applicable method (and how your broker and the CDS/clearing system compute it) is prescribed — confirm the method applied to your account rather than assuming, because it directly decides whether a sale is taxed at 10% or 7.5%.
Computing the gain
╔═══════════════════════════════════════════════════════════════════╗ ║ CAPITAL GAIN = DISPOSAL PROCEEDS − COST BASE ║ ╚═══════════════════════════════════════════════════════════════════╝ DISPOSAL PROCEEDS The amount received on sale, net of the costs of disposal allowed by the Act (brokerage and prescribed transaction charges) [R] COST BASE The amount paid to acquire the asset, plus costs of acquisition, plus allowable improvement costs [R]
Formula, then the tax.
Gain = Net proceeds − Cost base CGT = Gain × Applicable rate (10% or 7.5%) Net cash = Net proceeds − CGT
What sits between the price and your bank account
A NEPSE sale is not just price × quantity. The chain is:
┌──────────────────────────────────────────────────────────────────────┐ │ SALE VALUE = price per share × number of shares │ │ │ │ │ ├─ LESS BROKER COMMISSION │ │ │ Levied on the transaction value, on a SEBON-set │ │ │ slab scale — the rate falls as the trade size rises │ │ │ │ │ ├─ LESS SEBON REGULATORY FEE │ │ │ Levied on the transaction value │ │ │ │ │ ├─ LESS DP (Depository Participant) CHARGE │ │ │ A flat per-scrip charge by your DP on the sell side │ │ │ │ │ ▼ │ │ NET PROCEEDS │ │ │ │ │ ├─ LESS CAPITAL GAINS TAX (10% or 7.5% of the GAIN) │ │ ▼ │ │ AMOUNT CREDITED TO YOU │ └──────────────────────────────────────────────────────────────────────┘
Worked examples
Illustrative throughout. Charges other than CGT are omitted from the arithmetic so the tax effect is isolated; in practice deduct them first — see 3.3.
Example 1 — a short-term NEPSE gain
Bought 500 shares @ Rs 400 on 1 Shrawan 2083
Sold 500 shares @ Rs 520 on 1 Chaitra 2083
Holding period ≈ 240 days → ≤ 365 days → SHORT → 10%
Proceeds 500 × 520 = Rs 260,000
Cost base 500 × 400 = Rs 200,000
───────────
GAIN Rs 60,000
CGT = 60,000 × 10% = Rs 6,000
Net gain after tax = Rs 54,000
── What it would have cost last year ──
At FY 2082/83's 7.5%: 60,000 × 7.5% = Rs 4,500
ADDITIONAL TAX THIS YEAR = Rs 1,500 (+33%)Example 2 — the same gain, held past 365 days
Same purchase. Sold on day 400 instead of day 240, at the same Rs 520. GAIN Rs 60,000 CGT = 60,000 × 7.5% = Rs 4,500 Net gain after tax = Rs 55,500 ╔═══════════════════════════════════════════════════════════════╗ ║ HOLDING 160 DAYS LONGER SAVED Rs 1,500 OF TAX. ║ ║ That is 2.5% of the gain — the short/long spread. ║ ╚═══════════════════════════════════════════════════════════════╝ ! But note what this does NOT say. Holding longer also exposes you to 160 more days of price risk. If the share falls more than Rs 3 (0.58%) over that period, the price loss exceeds the tax saved. THE TAX TAIL SHOULD NOT WAG THE INVESTMENT DOG.
Example 3 — a larger portfolio, mixed holdings
Investor disposes of three scrips in FY 2083/84.
Scrip Held Cost Proceeds Gain Rate CGT
──────────────────────────────────────────────────────────────────────
A 120 days 400,000 520,000 120,000 10% 12,000
B 500 days 300,000 450,000 150,000 7.5% 11,250
C 700 days 250,000 230,000 (20,000) — —
──────────────────────────────────────────────────────────────────────
950,000 1,200,000 250,000 23,250
Effective CGT on total gains = 23,250 ÷ 270,000* = 8.61%
* Gains of A and B only (120,000 + 150,000 = 270,000).
! THE LOSS ON SCRIP C. Whether a capital loss can be set against
capital gains — and over what period — is governed by the Income
Tax Act's loss provisions [R]. Do NOT assume the Rs 20,000 loss
automatically reduces the Rs 23,250 bill. Confirm the treatment
for your circumstances before relying on it.Example 4 — land and building
NATURAL PERSON sells a residential property.
Purchased Shrawan 2076 Rs 8,000,000
Sold Bhadra 2083 Rs 14,000,000
Holding period ≈ 7 years → ≥ 5 years → LONG → 7.5%
GAIN = 14,000,000 − 8,000,000 = Rs 6,000,000
CGT = 6,000,000 × 7.5% = Rs 450,000
── If sold at 4 years instead ──
< 5 years → 10%
CGT = 6,000,000 × 10% = Rs 600,000
────────────
COST OF SELLING ONE YEAR EARLY = Rs 150,000Example 5 — compulsory acquisition
The same property, taken by compulsory acquisition on a
decision of the Government of Nepal.
GAIN = Rs 6,000,000
CGT = 6,000,000 × 2.5% = Rs 150,000
Against 7.5% on a voluntary sale = Rs 450,000
────────────
RELIEF = Rs 300,000
The rate fell this year from 5%/7.5% to 2.5%. The logic is that
you did not choose to sell, so you should not bear the full
voluntary-disposal charge.Capital gains as a FINAL TAX — the choice you now face
This is the most consequential change in this Part.
┌──────────────────────────────────────────────────────────────────────┐
│ YOU HAVE A CHOICE │
│ │
│ OPTION A — DO NOT FILE │
│ The tax withheld at source is FINAL. │
│ • Nothing further to pay on that gain │
│ • No return, no assessment, no audit exposure on it │
│ • But: no opportunity to claim losses, reliefs or a refund │
│ against it │
│ │
│ OPTION B — FILE A RETURN │
│ The gain enters your assessment. │
│ • Losses and reliefs may be brought into account [R] │
│ • A refund becomes possible if too much was withheld │
│ • But: the return is open to assessment and audit │
└──────────────────────────────────────────────────────────────────────┘
! AND NOTE THE COUNTERVAILING RULE FROM PART 2:
A resident natural person can no longer skip filing SOLELY
because their only income falls under Section 95Ka(6kha),
(6ga) and (6gha).
⇒ These two rules interact. Whether you are REQUIRED to file
for other reasons, and whether filing is ADVANTAGEOUS for
your gains, are separate questions. [R] Take advice on your
own facts — this course cannot answer it for you.Why the government made CGT final. A final tax is cheap to administer: it is collected at source by the broker or the land registry, and no assessment follows. For a market with hundreds of thousands of small investors, that is a large administrative saving. The trade-off is that it is less precise — it taxes the gain without regard to your overall position.
The exemption for donated land and buildings
New under Section 10(Jha1):
┌──────────────────────────────────────────────────────────────────────┐ │ Natural person owns land with a large accrued gain. │ │ │ │ │ ┌───────────┴────────────┐ │ │ ▼ ▼ │ │ SELL to a buyer DONATE to federal, provincial │ │ │ or local government │ │ ▼ │ │ │ CGT at 7.5% or 10% ▼ │ │ on the gain GAIN EXEMPT under 10(Jha1) │ └──────────────────────────────────────────────────────────────────────┘
Other collection changes affecting individuals
Ride-sharing platforms. Resident ride-sharing operators must withhold 1% advance tax from payments to natural persons on their platforms.
Rider pays the platform
│
▼
Platform pays the driver
│
├── withholds 1% advance tax ──► Inland Revenue
▼
Driver receives net
! Note this is ADVANCE tax, not a final tax. It is credited
against the driver's liability. Combine with the VAT change
in Part 8, where the platform also assesses and collects VAT
on the same service under a reverse-charge mechanism.Interest on deposits with microfinance institutions, rural development banks, the postal bank and cooperatives is taxable above Rs 25,000 under Section 10(2). Below that threshold it is not.
Insurance agents. Payments to resident individual insurance agents are subject to final withholding tax at 20% under Section 88.
Agricultural contribution awards. Section 88Ka levies no TDS on agricultural contribution awards up to Rs 500,000, and higher amounts may be exempted by Gazette notice.
Consumer committees. The 1.5% TDS on payments exceeding Rs 5 million for work carried out through consumer committees has been abolished.
What this means for a NEPSE investor — the synthesis
╔═══════════════════════════════════════════════════════════════════════╗ ║ FY 2083/84 FOR SOMEONE WHO INVESTS ON NEPSE ║ ╠═══════════════════════════════════════════════════════════════════════╣ ║ ║ ║ YOUR INCOME TAX FELL ║ ║ Exemption threshold doubled to Rs 1,000,000 ║ ║ Top rate cut 39% → 29% ║ ║ ║ ║ YOUR CAPITAL GAINS TAX ROSE ║ ║ Short holdings 7.5% → 10% (a third more tax) ║ ║ Long holdings 5% → 7.5% (half again as much) ║ ║ ║ ║ AND THE GAIN IS NOW FINAL-TAXED IF YOU DO NOT FILE ║ ║ Simpler, but it forecloses relief you might otherwise claim ║ ║ ║ ║ WHILE THE MARKET STRUCTURE IS CHANGING ║ ║ Intraday trading, short selling and derivatives are announced ║ ║ (Part 1). All three generate SHORT holdings — taxed at the ║ ║ higher 10% rate. ║ ║ ║ ╠═══════════════════════════════════════════════════════════════════════╣ ║ THE HONEST CONCLUSION ║ ║ ║ ║ A salaried investor is probably better off overall: the income-tax ║ ║ saving on Rs 1,000,000 of salary is large, and CGT applies only to ║ ║ realised gains. ║ ║ ║ ║ An active trader is worse off: they realise gains constantly, at ║ ║ the 10% short rate, and they may have little salary to benefit ║ ║ from the threshold change. ║ ║ ║ ║ ! AND THE OBVIOUS WARNING: a 2.5-point tax difference is not a ║ ║ reason to hold a deteriorating position for 366 days. Tax is a ║ ║ consequence of an investment decision, not a substitute for one. ║ ╚═══════════════════════════════════════════════════════════════════════╝
Common mistakes
MYTH "CGT is charged on the sale value."
FACT On the GAIN — proceeds less cost base.
MYTH "365 days means one year, so selling on the anniversary is fine."
FACT ≤365 days is the SHORT rate. You need day 366.
MYTH "Land and shares use the same boundary logic."
FACT They do not. Shares: ≤365 days = high rate (so 365 is high).
Land: <5 years = high rate (so exactly 5 years is LOW).
MYTH "My capital loss automatically cancels my capital gain."
FACT [R] Loss set-off is governed by the Act's own rules. Confirm it.
MYTH "Final tax means I cannot file."
FACT It means the withheld tax IS final IF you do not file. Filing is
a choice with its own consequences — and may be required for
other reasons.
MYTH "The rate rise is only 2.5%."
FACT 2.5 PERCENTAGE POINTS. On a long holding that is a 50% increase
in the tax charged.Part 3 — Revision table
| Disposal | FY 2083/84 | FY 2082/83 | Direction |
|---|---|---|---|
| Listed shares ≤ 365 days | **10%** | 7.5% | ▲ +33% relative |
| Listed shares > 365 days | **7.5%** | 5% | ▲ +50% relative |
| Land/building, natural person, < 5 years | **10%** | 7.5% | ▲ |
| Land/building, natural person, ≥ 5 years | **7.5%** | 5% | ▲ |
| Involuntary disposal (GoN compulsory acquisition) | **2.5%** | 5% / 7.5% | ▼ relief |
| **Final tax?** | Yes on shares, land/buildings and FX service income under 95Ka **if no return is filed** | ||
| Donated to government | **Exempt** under Section 10(Jha1) | New | |
| Ride-sharing payments to natural persons | 1% advance tax withheld by the platform | New | |
| MFI/cooperative deposit interest | Taxable above Rs 25,000 (Section 10(2)) | ||
| Insurance agents (resident individuals) | 20% final withholding (Section 88) | ||
| Agricultural contribution awards | No TDS up to Rs 500,000 (Section 88Ka) | ||
| Consumer committee payments > Rs 5m | 1.5% TDS **abolished** | ||
| Verify | ird.gov.np + Finance Act 2083 |
Saved in this browser only — there is no account to create. Clearing your browser data clears your progress.